Attock Cement: FY11 EPS expected at PKR 8.20

Attock Cement Result expectation: Attock Cement is scheduled to announce its full year FY11 result on September 11, 2011. We expect the Attock Cement to post PAT of PKR 710 mn, down 30% YoY (EPS: PKR8.20) with 4QFY11 PAT expected at PKR 285mn, up 132% YoY (EPS: PKR 3.28).

Earnings decline in FY11 shall emanate from sparse profitability during 1H. However, profitability is likely to snap back during 2HFY11 on the back of improved EBITDA margins and increased cement offtake.

We also expect Attock Cement to declare final dividend of PKR 4/share.

4Q recovery to limit decline in EBITDA margins during FY11: We expect EBITDA margins to decline by 19% YoY during FY11 due to poor margins in 1HFY11 while we expect 4QFY11 EBITDA margins to rise by 32% QoQ to PKR 1,044/ton due to full period impact of recovery in cement prices coupled with hedging of coal inventory.

Nominal uptick in dispatches despite strong demand in the south region: We expect Attock Cement’s FY11 local dispatches to rise by 2% YoY to 1.32mn tons while industry’s local offtake in the south region were up 20% YoY.

Export offtake for Attock Cement is likely to have augmented by 5% YoY to 0.53mn tons owing to volumetric demand from Iraq and South Africa

Investment perspective: At the last closing price of PKR 41.0/share, Attock Cement offers an upside of 95% to our Jun-12 price target of PKR 80/share and trades at FY11/12 PER of 5.0x/3.4x. BUY!

Elixir Securities

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